Family feud at world’s largest pork processor goes up a notch as father dismisses son’s fraud claims as ‘untrue and ‘misleading’

World’s biggest pork producer said allegations by Wan Hongjian are ‘untrue and misleading’
Wan Hongjian stripped of his directorship and other roles at the company in June

Hong Kong stock market

Chad Bray

Published: 6:30pm, 23 Aug 2021

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WH Group, the world’s biggest pork producer, struck back a second time on Monday at allegations by a former director that shaved US$1.4 billion off its market value last week.

The Hong Kong-listed company, which owns Smithfield Foods, reiterated that recent allegations by Wan Hongjian, one of the sons of its founder Wan Long, were “untrue and misleading” before offering a lengthy “clarification” of the accusations on Monday. It issued a separate statement denying the allegations on August 18.

Wan Hongjian, 52, alleged in mainland media last week that his father and the company’s former finance chief made wrong financial decisions that led to losses at the company.

WH Group stripped Wan Hongjian of his directorship and other roles in June for “misconduct of aggressive behaviours against the company’s properties”, the company said. WH Group has not provided additional information on the circumstances.

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The company’s share price fell by 11.3 per cent to HK$5.95 on August 19, its biggest one-day drop since the end of March and erased HK$11.2 billion (US$1.43 billion) from its market capitalisation in Hong Kong. The company’s shares rose 4.8 per cent to close at HK$6.12 on Monday.

Wan Long, the company’s 80-year-old founder, stepped down as CEO on August 12 after the company reshuffled its top leadership. Wan Long, who owned 23.34 per cent of the company at the end of last year, will continue to serve as executive director and chairman.

His younger son, Wan Hongwei, has been named executive director and deputy chairman, while Guo Lijun, the former chief financial officer, has been named CEO.

As part of his allegations, Wan Hongjian said his father and Guo instigated deals in February to import close to 100,000 tonnes of pork products from the US at higher than market prices, resulting in losses of more than 800 million yuan (US$123.2 million) at its China unit.

Wan Hongjian, the 52 year-old son of WH Group’s chairman Wan Long, was stripped of his roles at the company in June. Photo: Handout

“The prices for the import transactions were the then prevailing market prices being determined according to the market practice (i) based on the average purchase price of similar products of the same quality of the purchaser(s) in the relevant period; and (ii) with reference to the relevant price of sales of the seller(s) by related parties to non-related parties,” the company said in a stock exchange filing on Monday.

At the end of June, WH Group said it had an inventory of 164,000 metric tonnes of imported meat in the mainland, including pork imported from the US. Shuanghui Development, an indirect non-wholly owned subsidiary in the mainland, also took an inventory impairment provision of 126 million yuan (US$19.4 million) in the first half because of a drop in the price of live hogs in the mainland, the company said.

“As unrealised gain/loss on the import transaction has been eliminated on the consolidated accounts of the company, no impairment loss on such inventory is needed for the period ended 30 June,” WH Group said on Monday.

On August 12, the company reported its profit declined 17 per cent to US$539 million, compared with US$652 million in the year-earlier period.

The company also pushed back at claims by Wan Hongjian that Guo was not qualified to be promoted to CEO.

“Taking into account of, among others, Mr Guo’s experience, qualifications and in-depth understanding of the business of the group, the board considers Mr Guo to be the most suitable candidate as the chief executive officer,” WH Group said.

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